South Africa

Is it a new car or a used car? Buy or lease?

For many, owning a car is a necessary expense. Twice a month, you need something to carry your shopping from A to B, add your kids to your cart, or carry groceries around. In this cash-focused era, many people prefer low fuel, easy repairs, and cheap insurance.

All of this is a very wise priority for vehicles, but in many cases people do not want to stick to the criteria mentioned above and are willing to spend R10,000 p / m or more on vehicle installments. .. They can reassure you by buying a new car and tell you that you have a warranty / maintenance plan in case something goes wrong.

But let’s be honest. Do you think you should spend rand 10,000 per month on something else unless you really like cars? Holidays, severance pay? Payment of your deposit, maybe. And don’t even think I’m stupid. At R10,000 p / m, you can grab the steering wheel of a discreet family SUV like the Toyota RAV4. Let’s take a look at the options that suit your needs and have the potential to reduce your monthly budget.

For new purchase

It is safe to buy a new car. Knowing that you are the first person to drive a new car in the showroom gives you peace of mind and is very unlikely to have any mechanical problems. Of course, if something goes wrong, there is a reliable guarantee. You are also most likely to buy a car with the latest safety features. It cannot be priced.

It’s as nice as the smell of a new car, but if you drive off the showroom floor, you’ll be a victim of depreciation. Also, new car salespeople are less likely to offer discounts because the prices are pre-determined by the manufacturer.

In the case of second-hand purchase

The biggest advantage of buying a used car is the discount. Thanks to depreciation, you can buy a car two or three years old at a much lower price than a new car. The large second-hand market also means that there are many options. In other words, you can take the time to make the best purchases.

The risk most often arises when buying an old used car. It is dangerous not to have a complete history of potential purchases. It can turn into a perfect lemon. Some used cars have remnants of warranty and maintenance / service plans, but most cars do not. This means that repairs and services come from your pocket. It’s not that important, but it’s still worth considering that your personalization options are limited. Used cars are purchased as-is and no special options are available.

Buy vs lease

Recently, many people have chosen to lease a car. Although still a relatively new option in South Africa, leasing is very popular with consumers, especially in the United States. Leases can be considered long-term rentals. Leasing contracts are usually much shorter (3-4 years) than car loans (5-6 years). Just like when you buy a car, leasing requires a deposit and monthly installments. However, monthly insurance premiums are much less than mortgage payments.

Take BMW as an example. Leasing the 118i hatchback (3 years with a limit of 80,000 km) returns the customer to approximately R8,400 p / m. This requires a deposit of R50,000. At the end of the contract, we may hand over the vehicle and lease a new model.

If you fund the same car for 5 years (without mileage restrictions), a R50,000 deposit and balloon payment will cost about R11,500 p / m. Unlike the lease model, when the contract ends, you own your BMW. It’s clear why leasing is growing in popularity. You can drive a new car for much less than you expected (with mileage restrictions) and no stress associated with owning it.

Companies like FlexClub offer another option. Through the subscription service, members have access to a variety of cars that meet their requirements. All you have to do is order a car and have it delivered to your home. The company is ideal for individuals who need a car, as they can exchange cars or cancel their subscriptions, but this is not always the case.

Consumers have a myriad of choices, all designed to provide individuals with the best possible consumer experience. Sit down with your budget and see what works best for you. Some people prefer to own a car over leasing, but the benefits of leasing are undeniable.Similarly, you really necessary New cars, high quality used cars can save a lot of money in the long run.

Last week I asked you to send me a question about finance and investment.Here, Suzen Haumann * and Yolande Butchart * Brenthurst Wealth Management Share expert advice by providing answers to your questions.

Judy asked,

I have had money in my UK account since I worked in the UK many years ago. I’m back in SA. That’s a fair amount, and currently about 0.01% of bank accounts are “earning”. This has been going on for over a decade and is stressful given how much I’ve lost growth.

I searched for a broker and I always get the answer that I can’t invest money in it because I’m not a UK taxpayer.

Help me! what can I do?

Susan and Yolande answer,

You can invest in funds with better returns than bank accounts such as savings deposits. You need to prove the source of the funds, usually by submitting a three-month bank statement. If you are a SA resident and taxpayer, you can transfer money from your UK bank account to the international platform (you will need to check with your bank if direct debit is possible).

One option to consider is to invest in GBP, among other things, with one of Momentum Wealth International’s funds that manages: Brenthurst Global Balanced Fund And that Brenthurst Global Equity FundA South African financial advisor can help. As with investment and financial planning changes, you need to consider the investor’s personal situation, risk profile and financial goals.

 

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